Terms of settlement, etc

The main principles for the financial terms for settlement are described below (points 8.1.-8.14), see otherwise the provisions of the RE Act.

8.1. A premium shall be granted (”contract for difference”) for electricity produced at Kriegers Flak electricity production plant in the Baltic Sea. The premium shall be calculated per hour as the difference between the price per kWh tendered by the Concessionaire and the spot price of electricity in the relevant area. The total premium in a given hour shall be the product of the premium and the output measured in that hour. The spot price of electricity shall mean the hourly rate per kWh on the spot market in the relevant electricity grid price area (DK 2) stated by the Nordic electricity exchange, Nordpool.

8.2. The kWh-price tendered by the Concessionaire shall not be indexed.

8.3. If at least 95% of the planned capacity of the wind farm is connected to the grid prior to 1 January 2022, the premium mentioned shall be granted for electricity production corresponding to a production of 30 TWh. If less than 95% of the capacity of the wind farm is connected to the grid at this time, the production eligible for premium shall be reduced by 0.3 TWh to 29.7 TWh. For each six month-period thereafter in which at least 95% of the projected capacity is still not connected to the grid, the production eligible for supplement thereafter will be reduced by an additional 0.3 TWh. In the calculation of the amount of the capacity of the wind farm connected to the grid, the capacity of one wind turbine shall be included as connected to the grid from the time when it has supplied the first KWh to the collective electricity supply grid. This shall apply

June 2016 34 even if subsequent technical problems should temporarily render the wind turbine out of service.

8.4. Premiums shall not be granted for production in hours when the spot price is not positive. However, the production shall not be included as part of the production eligible for premium.

8.5. Payment shall be made on a monthly basis and shall be made by Energinet.dk.

8.6. If the Concessionaire is to pay a feed-in tariff for transmission of electricity to the main electricity supply grid, a premium shall be granted corresponding to this tariff. The premium mentioned shall be granted for electricity production corresponding to the production described under 8.point 2 above.

8.7. If the market price (the hourly rate on the spot market) of electricity produced at the plant exceeds DKK [the tender price] per kWh, Energinet.dk shall calculate a negative premium. Any negative premium shall not be charged but set off against the next positive premium. There is no limitation in the length of the period in which negative premiums can be calculated.

8.8. The Concessionaire itself shall ensure the sale of the production in the electricity market and pay costs in this connection.

8.9. Balancing costs for the electricity from the wind turbines shall not be reimbursed.

8.10. By notifying Energinet.dk, the Concessionaire shall be entitled to opt out of the premium scheme. This opt-out shall be effective from the first day of a month and with prior notice of at least one month. Once the Concessionaire has opted out, the Concessionaire shall not be entitled to resume the premium scheme.

8.11. The premium scheme shall apply for a period of no more than 20 years from the connection of the wind turbines to the collective grid. The offshore wind farm shall be deemed to be connected to the grid when the first kWh from one or more of the wind turbine has been supplied to the collective grid.

8.12. The Concessionaire may not receive any other state aid in connection with construction and grid connection of Kriegers Flak electricity production plant than the premium mentioned under this point, without approval from the Danish Energy Agency.

8.13. The premium shall be subject to the electricity from the offshore wind farm being supplied to the collective electricity supply grid.

8.14. The Concessionaire shall bear the full commercial risk of the tender price per kWh, and the offshore wind farm shall be at the Concessionaire’s own cost and risk. Hence, the Concessionaire shall not be entitled to bring claims against the Danish Energy Agency in this respect.

June 2016 35 9. Compensation for non-compliance with obligations regarding grid connection

(before and during the construction phase of the offshore wind farm)

9.1. Before and during the construction phase of the offshore wind farm, Energinet.dk shall, on an objective basis, compensate for losses that the Concessionaire might suffer as a consequence of Energinet.dk not meeting deadlines and conditions for grid connection of the offshore wind farm, including deadlines for commissioning, cf. section 31(2) of the RE Act.

9.2. The “construction phase” of the offshore wind farm will be fully completed when all the wind turbines in the offshore windfarm have been put into operation.

An individual wind turbine will be considered as “in the construction phase" until it has supplied its first kWh to the collective electricity grid. Compensation will be paid for wind turbines “in the construction phase” on an objective basis pursuant to

section 31(2) of the RE Act.

When a wind turbine has supplied its first kWh to the collective grid, compensation for losses on an objective basis according to section 31(2) of the RE Act may no longer be granted. Instead, payment will be granted according to section 35 of the RE Act in the event of reductions. Reference is made to section 35 of the RE Act and point 10.1 below.

If some wind turbines are still “in the construction phase”, and other wind turbines have supplied their first kWh to the collective grid, it may be necessary to pay compensation according to section 31(2) of the RE Act for the first-mentioned wind turbines, while the latter wind turbines will receive payment for losses according to section 35 of the RE Act.

9.3. Energinet.dk shall ensure that grid connection can take place from 1 January 2019, unless Energinet.dk has agreed another date with the Concessionaire.

It shall be a condition that the grid connection is commissioned and can receive power from the Kriegers Flak electricity production plant in the Baltic Sea. The collective grid including facilities for transmission of power to shore are considered suitable for receiving power from the wind turbines when the facilities for

transmission of power to shore have successfully undergone a commissioning test and have been put into operation.

9.4. In connection with the construction phase of the offshore wind farm, Energinet.dk shall also compensate on an objective basis losses that the Concessionaire might suffer as a consequence of the particular situation that the facilities for transmission of power to shore contain a design fault or other similar error and therefore are not able to supply electricity to the collective grid from the offshore wind farm after the installation has been put into operation.

When the facilities for transmission of power to shore have undergone a successful commissioning test, facilities for transmission of power to shore are assumed not to contain any design faults or other similar errors.

June 2016 36 However, there may be situations where it has been ascertained that the facilities for transmission of power to shore cannot supply electricity from the commissioned wind turbines to the collective grid because the cable routing onshore does not have the specified transmission capacity, and where some - but not all - wind turbines have been put into operation. This may also be the case in situations where the facilities for transmission of power to shore cannot supply electricity from the commissioned wind turbines due to a fault in the facilities for transmission of power to shore as a consequence of external damage (e.g. that the subsea cable is damaged by an anchor on the seabed or in case of a fire), or due to damage to individual components or technical problems or other faults.

9.5. Energinet.dk's liability in damages pursuant to section 31(2) and (3) of the RE Act is limited to a total of DKK 1.8 bn.

9.6. The compensation shall cover documented necessary additional costs as a

consequence of delay or lack of functionality. Among other things, the compensation could cover costs for e.g. emergency power generators or for interest on investments already madeand necessary additional costs as a consequence of lack of electricity production.

Compensation for lost production shall be based on the tender price and shall be calculated on the basis of the production the wind turbines would have produced under the actual conditions.

The calculation of losses of production shall include lost revenues less the costs saved. The production included in the calculation of the losses of production, and for which the Concessionaire is compensated, shall be included in the calculation of the production eligible for supplement.

9.7. The Concessionaire shall limit its losses as far as possible.

9.8. No compensation will be granted for force majeure. Force majeure shall cover circumstances arising at no fault of the Concessionaire/Energinet.dk, and which are beyond the control of the Concessionaire/Energinet.dk, e.g. war, sabotage,

earthquake, extreme meteorological conditions and similar.

9.9. Disagreements and entitlement to compensation as well as the amount of

compensation shall be decided by a court of law, cf. section 31(3) of the RE Act.

9.10. Reference is made to the licence for construction on requirements for grid connection, etc. in point 13.

9.11. The Danish Energy Agency shall not be liable to pay compensation for non-compliance with obligations regarding grid connection according to this point 9.

10. Payment for reductions (after the construction phase of the offshore wind farm)